BFSI, tech, and SIPs: Kotak’s equity head reveals where the smart money is moving

As Indian equity markets recover sharply from their recent lows, investors are grappling with questions about the sustainability of this recovery, sector rotation, and global headwinds. In an interaction with Business Today, Shrikant Chouhan, Head of Research – Equity at Kotak Securities, shares his views on market direction, promising sectors, FII behaviour, and how both new and experienced investors can build smart portfolios in today’s uncertain times. Edited excerpts:

BSE Sensex, BSE MidCap, and BSE SmallCap indices have rallied more than 5% so far. Do you think this recovery will sustain going forward?

The market has retraced almost 60% of the entire decline witnessed from the highs, which is a huge thing and that too in a very short span of time. Based on the current sharp rally and fresh geopolitical tensions, we feel the market may spend time/consolidating within the broad trading range (Sensex - 81,500 and 78,500).

Where do you see the markets by the end of 2025?

We are keeping the target of 86,000 on Sensex and 26,000 on Nifty which is 19x to 20x to FY27 earnings.

Which sectors appear attractive after the recent correction? Why?

We feel BFSI is the only sector to do well on the back of fair valuations, positive stance of the RBI on the rate cut in the coming meetings and enough liquidity into the system. We can see some activity in FMCG stocks but for that we need the volume growth in Q4 results in the top companies. 

Could you share a few stocks that may deliver solid returns for investors over the long term (4-5 years)?

At these levels we need to be extremely selective. We like select private banks in that specifically, we like HDFC Bank & ICICI Bank. We also prefer Bajaj Twins that Bajaj Finan and Bajaj Finserv.  Few NBFCs such as Shriram Finan and Chola finance.  From the Technology universe we like Infosys and TCS as a value play.

How can a new investor build a portfolio despite the ongoing volatility in global markets? What would be the right asset allocation strategy?

For investing directly in the market investors must choose the way of investing with the help of professional and registered advisor. If investors don’t have experience and support of professional advisors, then they should prefer investing via MFs and follow the strategy of SIP. Allocation should in primarily in large cap companies but now a days there are multiple options if investors choose investing in Flexi cap or Multi assets then also it will do but follow the route of SIP.

What are your views on precious metals?

They rallied to extreme levels and should remain in a broader trading range. Buy only on dips with a long term view.

Why are FIIs pulling out of domestic equity markets? Should this be a concern for retail investors?

FIIs give more weightage to the relative performance of the dollar compared to the currency of the country in which they invest. For the time being since last two months although it is marginal we are experiencing buying interest from FIIs. I don’t think It’s a concern till the dollar index is at 100 and our currency below the level of 86. In case the equation changes then it would some worries.    

When do you expect FIIs to turn net buyers in Indian equity markets again? 

Depends on the earnings and Trend of the currency. If earnings improves then there will strong buying interest from FIIs for investing in Indian equities as the currency has erased an early losses of the CY25.